For the small business person and entrepreneur, cash is king. It is a scarce resource, and you need every dollar to develop products, buy inventory, hire employees and attract customers. There is not always a lot of resources to spend on legal issues — and they can be easy to ignore.
A quick search on Google for legal tips for entrepreneurs returns dozens of articles spelling out all the horrible things that could happen to your business if you ignore the basics of business formation, tax planning and compliance, having clear expectations with your investors, following employment laws and regulations and protecting your intellectual property, to name a few.
What most articles will not tell you are the specifics of how to actually address those issues.
So, how do you prioritize issues and make effective use of limited resources? First and foremost: do your homework.
Be Prepared
When you go to a professional who’s paid on an hourly basis, ask thoughtful and targeted questions so you can receive practical answers and solutions. You don’t need the best solution to every problem, but solutions that will work within the resources you have. Make sure the professional you work with understands both your needs and limitations.
Get a Mentor
Talk to successful entrepreneurs and people doing business in your field. Ask how they structured their businesses and what problems they’ve had. Find out how they mitigate risks and who they use to comply with legal and tax issues. Ask how much it costs them and where they see value from investments in professional advice. If you don’t have a mentor who is an entrepreneur or business leader, seriously consider finding one.
Sleuth Online
Make use of the information that is available on the Internet. Those articles mentioned in the first paragraph are a great way to identify issues and create a checklist. Visit your local chamber of commerce and look at the website for the California Chamber, which has form sets and standardized policies that may help you save money early in the startup process.
Watch Your Competitors
Look at what your competitors are doing before you get too far into your business plan. Do your own basic searches of company names and trademarks. In an hour, you can have a pretty good idea if someone else is using a company name or trademark that you want to use. Another tactic: Search business names at the California Secretary of State and the United States Patent and Trademark Office.
Get in Compliance
Look at the industry guides put out by the State of California or the Internal Revenue Service to identify specific regulatory or tax issues that will apply to you. One thing you cannot afford to ignore is compliance with rules and regulations applicable to your business. The failure to understand the impact these can have on your operations and costs can put you out of business, make it difficult to get necessary permits or result in fines and criminal penalties.
Doing your homework and being prepared is not going to answer all of your questions, but it will put you in the position of knowing what you don’t know and where you need help in terms of legal planning and compliance costs for your business. This will, in turn, help you determine when making an investment in legal or other professional advice is not just prudent or an option, but a necessity for the success of your business.
* This article first appeared in The Press-Enterprise and other Southern California Newspaper Group publications online on May 21, 2018. Republished with permission.
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